### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

_______________________________________ ) Michael Gurevich and Elena Gurevich , ) P etitioners ) ) DOT OST

- 2012

- 0040 v. ) ) Compagnia Aereas Italiana, S.p.A. )

_______ _______________________________ )

PETITIONERS’ MOTION TO FILE A REPLY PURSUANT TO 14 C.F.R. §302.6(c)AND REPLY TO THE ANSWER OF ALITALIA

- COMPAGNIA AEREA ITAL IANA, S.P.A.

Communications with respect to this document s hould be addressed to Counsel for Petitioners:

Hank Bates CARNEY WILLIAMS BATES PULLIAM & BOWMAN, PLLC 11311 Arcade Drive, Suite 200 Little Rock, AR 72212 (501) 312

- 8500

– Telephone (501) 312

- 8505

– Facsimile hbates@carneywilliams.com

### i INDEX

I. Introduction

................................ ................................ ................................ .......................... 2

I I

. Alitalia Admits t he Fundamental Factual a nd Legal Issues Relevant t o This Proceedi ng a nd t he Related Civil Action

................................ ................................ ............. 3

A. Alitalia Admits It Informs Passengers That Its General Condit ions o f Carriage Apply t o Travel T o a nd From The U.S.

................................ ................... 3

B. Alitalia Admits That It Has Not Provided Actual Notice As Required b y 14 C.F.R. §221.100, Et. Seq

. ................................ ................................ .................... 3

C. 14 C.F.R. §221.100, Et. Seq. Is Not a Mere “Technicality”

— As a Matter

o f Law Unnoticed Tariff Provisions Are Not Rel evant t o t he Passenger Contract

................................ ................................ ................................ .................... 4

D. Alitalia Admits That It Must Comply With Applicable Laws a nd Regulations Such As E U 261, Independent o f Any Tariff o r Contract Language

................................ ................................ ................................ .................. 6

E. Alitalia Admits That It Does Not “Voluntarily” Comp ly With E U 261

.................. 6

I II

. Alitalia Misrepresents t he Requirements a nd Applicability o f t he E U 261 Provisions Plaintiffs Seek t o Enforce

................................ ................................ .................. 7

I V

. Alitalia Cannot Retroactively Alter Past Passenger Contracts a nd Its “Stopgap” Amendment t o t he G CC Only Adds Mor e Confusion a nd Deception

................................ . 8

V. Alitalia’s “Stopgap” Notation Reemphasizes t hat Under Rule 55(B)(3)(B) o f t he Tariff, t he Ticket and GCC Appl y t o Travel t o a nd f rom t he U.S.

................................ .... 9

V I

. Alitalia Misses t he Point Regarding t he Lac k o f Approval o f Tar iff Rule 55

................... 10

V II

. Conclusi on

................................ ................................ ................................ ......................... 10

### 1 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

_______ _______________________________ ) Michael Gurevich and Elena Gurevich , ) ) DOT OST

- 2012

- 0040 v. ) ) Compagnia Aereas It aliana, S.p.A. )

_______ _______________________________)

PETITIONERS’ MOTION TO FILE A REPLY PURSUANT TO 14 C.F.R. §302.6(c)AND REPLY TO THE ANSWER OF ALITALIA

- COMPAGNIA AEREA ITAL IANA, S.P.A.

Pursuant to 14 C.F.R. §302.6(c) Petitioners seek leave to file a Reply to the Answer of

Alitalia

- Compagnia Aerea Italiana, S.p.A. (“Alitalia”). Although replies are normally not

authorized

, leave should be granted in this instance for the following reasons. One, Alitalia’s

Answer raises numerous factual and legal issues that r equire response and clarification as to the

underlying law, the controlling regulations, the related civil action, the applicability of EU 261

and the construction of Alitalia’s tariff provisions. Two, although Alitalia admits to the alleged

deception and to failing to comply with the relevant regulations, Alitalia attempts to excuse its

violations as “technicalities.” This “technicality” argument requires a reply. Three, Alitalia has

revised its General Conditions of Carriage since the filing of the Com plaint. Petitioners are

entitled to an opportunity to respond to this change in the factual circumstances.

For all the foregoing reasons, Petitioners respectfully request leave to file the Reply to the

Answer of Alitalia

- Compagnia Aerea Italiana, S.p.A se t forth below.

### 2 PETITIONERS’ REPLY TO THE ANSWER OF ALITALIA

- COMPAGNIA AEREA ITAL IANA, S.P.A

.

I. INTRODUCTION

.
Alitalia admits that it informs its passengers that its General Conditions of Carriage

(“GCC”) apply to travel to and from the U.S. and that th ose GCC incorporate rights under EU

261. It also admits that it provides its passengers no notice whatsoever of its tariff on file with

the U.S. Department of Transportation (“DOT”). Alitalia even admits that it must comply with

all applicable laws, rega rdless what its tariff or GCC provide, but that it has made an affirmative

policy choice not to voluntarily comply with the compensation provisions of EU 261. That

policy choice is confirmed by its legal positions in U.S. and European courts, where it has

challenged EU 261 and attempted to avoid compliance.

Alitalia’s admissions simplify this dispute. The primary impetus to Petitioners ’ filing of

the Complaint was Judge Sharon Johnson Coleman’s directive in the related civil action that

Petitioners seek a determination by DOT as to whether Alitalia’s tariff Rule 55 applied to

Petitioners ’ travel despite Alitalia’s failure to comply with DOT’s regulations requiring actual

notice (among other reasons). At the very least, Petitioners request that the DOT (a) confirm that

absent actual notice as required by 14 C.F.R. §221.100

, et seq. , tariff provisions are not part of a

passenger’s transportation contract ; and (b) confirm Alitalia’s admission, that regardless whether

the tariff provisions are applicable or ho w they are construed, Alitalia must comply with EU 261

and other applicable international and federal laws independently.

In what it calls a “stopga p ” measure, Alitalia attempts to retroactively alter passenger

contracts entered into over the last three ye ars by adding new language to its GCC shortly before

it filed its Answer. Alitalia cannot retroactively alter the terms of transportation contracts for

completed flights. Regardless, moving forward, Alitalia’s “stopga p ” measure highlights how

### 3

Alitalia is seeking to benefit from the confusion by picking and choosing when to adhere to it s

passenger contract. Alitalia’s “stopga p ” language also highlights that the only reasonable

interpretation of its tariff Rule 55 is that the passenger ticket (and the GCC incorporated by

reference) sets forth the transportation cont ract.

II. ALITALIA ADMITS THE FUNDAMENTAL FACTUAL AND LEGAL ISSUES RELEVANT TO THIS PROCEEDING AND THE RELATED CIVIL ACTION

.

A. ALITALIA ADMITS IT INFORMS PASSENGERS THAT ITS GENERAL CONDITIONS OF CARRIAGE APPLY TO TRAVEL TO AND FROM THE U.S.

In the Complaint (pp. 4

- 6)

, Petitioners demonstrated that Alitalia consistently and

unequivocally informs its passengers that its General Conditions of Carriage (“GCC”) apply to

flights to and from the U.S. Alitalia does so in the GCC itself (Ex. 1), at the point of purchase

(Ex. 2), at its “Passenger Rights” webpage (Ex. 3), at its “Customer Commitment” webpage (Ex.

4), and in its DOT

- mandated Customer Service Plan (Ex. 4). Petitioners also demonstrated t hat

the GCC included a promise to provide compensation consistent with the requirements of EU

261. Compl. at 7 (GCC at Art. X).

Alitalia simply admits these allegations.

B. ALITALIA ADMITS THAT I T HAS NOT PROVIDED ACTUAL NOTICE AS REQUIRED BY 14 C.F.R. §2 21.100 , ET. SEQ.

Alitalia admits that it does not provide any notice of any of its tariff provision s to

any of its passengers as required by 14 C.F.R. §221.100

, et seq. Alitalia Answer at 10 (“Alitalia

acknowledges that its General Conditions of Carriag e and its website did not contain any

reference to its filed tariff. 1 

### ”)

1 Alitalia also does not refute Petitioners’ allegation that Alitalia does not make the tariff available for inspe ction as required by 14 C.F.R. §221.101 or provide the notice required at ticketing locations required by 14 C.F.R. §221.103.

### 4

C. 14 C.F.R. §221.100 , ET. SEQ. IS NOT A MERE “TECHNICALITY”

—AS A MATTER OF LAW UNNOTICED TARIFF PROVISIONS ARE NOT RELEVANT TO THE PASSENGER CONTRACT

.
In an effort to avoid complianc e with the notice requirements in 14 C.F.R. §221.100,

Alitalia asks the DOT to dismiss the notice requirements it adopted as a meaningless

“technicality.” Alitalia is wrong.

14 C.F.R. §221.100 explicitly states that “Carriers must make tariff information available

to the general public.” (Emphasis added). In the Notice of Proposed Rulemaking for the notice

requirements, DOT explained that passengers’ first line of inquiry about their international travel

rights is typically to question the airline itself and consult the travel documentation publicly

provided

, which typically contains contractual provisions or refers all passengers to the airline’s

contract of carriage. 62 FR 10758, 10761, Docket OST 97

- 2050 (“[T]o the extent that

passengers might have qu estions about the application or interpretation of certain provisions, it is

likely that they would consult the carrier directly, rather than its tariff.”). Indeed, the DOT

revisions recognize that the ticket, contract of carriage and related documents ar e the primary

source to provide sufficient notice to passengers and that a tariff should only provide more

detailed rights where the tariff is expressly incorporated by reference into the contract of

carriage. Id. (“[T]o the extent that tariffs might set forth certain material greater in detail than

travel documents, the Department already has an alternative framework in place to permit its

incorporation into a contract of carriage with adequate notice to passengers.” ( E mphasis

added)).

Consistent with m odern industry practice and consumer expectations , the DOT has

endorsed a notice regime that is not premised on the content of undisclosed tariffs filed with the

Department. Id. (“We are not aware of particular conditions or issues in any market where

### 5

co ntinuation of rules tariffs would be superior to a notice regime.”) Furthermore, the DOT has

made clear that it does not wish to interfere with the contract formation that occurs through the

ticket, contract of carriage and other direct communication betw een carrier and passenger

. Id.

(“The graduated system of written notice and right of immediate inspection for general terms,

coupled with direct notice and/or a right to an immediate explanation of certain more important

terms, constitutes a deliberate b alance between the ease of contract formation and the importance

of informed assent.”).

In the preamble to the final rulemaking, DOT again addressed the issue of constructive

notice, expressly rejecting a proposal by two air carriers to allow reliance on t he tariff filing

mechanism for constructive notice of contract terms. “ Air Pacific and Qantas have failed to

provide any reasons as to why passenger rules tariffs should be treated differently than cargo

rules tariffs or why relying on the tariff filing m echanism for passenger notice is better than

relying on normal contract law. ” 64 FR 40654, 40656

- 57.

Alitalia argues that a finding of noncompliance with the notice regulations would amount

to “retroactive” invalidation of the tariff. As a preliminary ma tter, the DOT never validated or

approved the relevant tariff provisions (Rule 55). More fundamentally, the notice requirement

does not implicate the validity of the tariff provision per se . Instead, notice goes to the narrower

question of whether the ta riff provision applies to a particular passenger’s transportation

contract. With the promulgation of 14 C.F.R. §221.100

, et seq., constructive notice was

supplanted with a clear federal mandate requiring actual notice by either incorporation into the

tick et and GCC or by required signage. In the absence of actual notice tariff provisions simply

are not part of the passenger contract. In actuality, it is Alitalia that is attempting to retroactively

### 6

incorporate te rms that it chose not to include in the con tract and chose not to reveal to the

passenger at the time of contract formation.

D. ALITALIA ADMITS THAT IT MUST COMPLY WITH APPLICABLE LAWS AND REGULATIONS SUCH AS EU 261, INDEPENDENT OF ANY TARIFF OR CONTRACT LANGUAGE

.

Alitalia admits it “must . . . co mply with laws and regulations applicable to air

transportation to and from the United States, regardless of whether or not its conditions of

carriage apply to such transportation.” Answer at 12. Alitalia also admits that its tariff cannot

excuse it from complying with applicable law. Id. at 13. Th ese are critical admission s because

they highlight that Alitalia must comply with EU 261 regardless whether it promises to do so in

its passenger contract and regardless the content of its tariff

.

E. ALITALIA ADMITS THAT IT DOES NOT “VOLUNTARILY” COMPLY WITH EU 261

.
Alitalia admits that it does not “voluntarily provid[e] compensation to passengers under

EU 261. Answer at p. 14. This admission is consistent with Alitalia’s opposition in the related

civil acti on and its unsuccessful attempt s to challenge EU 261 before European courts, including

the European Court of Justice. See Wallentin

- Hermann v. Alitalia , European Court of Justice,

Case No C

- 549/07, Judgment of December 22, 2008 (Attached as Exhibit 15). This policy

position is the impetus for the related civil action and the reason the proposed class is substantial

in size. Alitalia’s choice to challenge EU 261 rather than voluntarily comply with it also

explains why Alitalia fears it may be liable for “ millions of dollars in damages for alleged failure

to voluntarily provide compensation.” Answer at 1.

### 7

III. ALITALIA MISREPRESENTS THE REQUIREMENTS AND APPLICABILITY OF THE EU 261 PROVISIONS PLAINTIFFS SEEK TO ENFORCE

.
Alitalia admits it is required to co mply with applicable law and that it does not comply

with EU 261 or the provisions of its GCC that incorporate EU 261. However, Alitalia

misrepresents the nature of Petitioners ’ claims in the related civil action, the applicability of EU

261 to Alitalia f

lights originating in both Europe and the U.S., and the enforceability of EU 261

by U.S. courts.

Alitalia misrepresents Petitioners’ claims in the related civil action. Answer at 1

- 2. The

civil action is a straightforward attempt to enforce the provision s of EU 261 that Alitalia admits

it has chosen not to comply with voluntarily. On behalf of a class of similarly

- situated U.S.

residents, Petitioners seek to enforce the provisions of EU 261 related to cancellations and long

delays. Because Alitalia expl icitly incorporated these rights into its ticket and GCC, Petitioners

chose to bring th e c i vil action initially as a breach of contract claim.

Contrary to Alitalia’s arguments (Answer at 2, 11), EU 261 is unquestionably applicable

to Alitalia’s flights to and from the U.S. For carriers such as Alitalia that operate pursuant to a

license granted by an EU

- member country, EU 261 applies to flights both to and from airports in

EU

- member countries. 2 

### Ex.16 at Art. 3. In two recent decisions on EU 261, courts h ave

determined that EU 261 applies to flights operated by European carriers that originate in the U.S.

and that U.S. residents can enforce rights under EU 261 in U.S. federal courts. See

Giannopoulos et al v. Iberia Aeras de Espana, S.A., , 2011 U.S. Dist

. LEXIS 82304 (N.D. Ill.

July 27, 2011) (rejecting defendant European airline’s argument that EU 261 does not apply to

flights originating in the US and finding that enforcement of U.S. passengers ’ rights in the U.S.

did not violate international comity) ( attached as Ex. 17); Polinovsky et al v. Deutche Lufthansa

,

2 For U.S. carriers and other carriers licensed by a non

- EU country, EU 261 only applies to flights that depart from an airport in an EU country. Ex. 16 at Art. 3.

### 8

2012 U.S. Dist. LEXIS 44363 (N.D. Ill., March 30, 2012) (Judge Sharon Johnson Coleman

rejected multiple challenges to the enforcement of EU 261 provisions against a European carrier

by U.S. reside nts in U.S. federal court) (attached as Ex. 18). 3



### IV. ALITALIA CANNOT RETROACTIVELY ALTER PAST PASSENGER CONTRACTS AND ITS “STOPGA P ” AMENDMENT TO THE GCC ONLY ADDS MORE CONFUSION AND DECEPTION

.

Alitalia ’s self

- described “stopga p ” measure only confuses mat ter further. Shortly before

filing its Answer, Alitalia added the following notation to the beginning of its GCC:

THE PROVISIONS ON THE PASSENGER’S TICKET AND CONDITIONS OF CARRIAGE ARE APPLICABLE UNLESS INCONSISTENT WITH OUR TARIFFS OR APPLICABLE LAW, IN WHICH EVENT SUCH TARIFFS OR LAW SHALL PREVAIL.

Answer at 10 (Emphasis added). Obviously, this very recent notation has no relevance to

Petitioners’ travel completed three years ago in April 2009. Alitalia cannot retroactively change

its passenger contr act with Petitioners or with the thousands of other U.S. passengers who flew

during the Class Period.

Moreover, moving forward, Alitalia’s “stopga p ” measure only adds to the confusion and

deception. On its face, the “stopga p ” language informs the passeng er that normally the terms in

the ticket and the GCC “are applicable” to travel to and from the U.S. with some possible

exceptions where the y may be “inconsistent” with specific tariff provisions. Yet, Alitalia is

taking the position in court and before t his agency that pursuant to Rule 55(B)(3)(D), the GCC

never applies to travel to and from the U.S. Alitalia’s position is not one of intermittent

inconsistency

, but complete nullification.

3 Alitalia misconstrues the holding in Polinovsky, et al., v. British Airways, PLC , No. 1:11

- cv

- 00779 (March 30, 2012). That ruling was limited to the construction of the specific language in the British Airways transpor tation

contract , holding that the contract had not incorporated any rights under EU 261 because it neither enumerated those rights specifically n or incorporated E U 261 by specific reference. The Court did not address any of British Airways’ legal challeng es to the enforceability of EU 261 (which mirrored the defenses rejected in Iberia and Deutsch Lufthansa ).

### 9

Alitalia’s self

- serving scheme is clear. As it has in the past ( see Ex. 5), it wants to pick

and choose when the GCC applies to travel to and from the U.S. When it suits its self

- interest,

Alitalia will take the position that the GCC is consistent with the tariff. As it candidly admits,

other than the Article X provi sions related to EU 261, Alitalia very much likes its GCC

provisions and wants to keep them as handy defenses. Answer at 14. However, when

compliance with the GCC is not in its interest, it wants to play the “inconsisten c y” card, even if

the so

- called “i nconsistency” is that the GCC never applies. In short, Alitalia is seeking to

continue to play the same game of deception.

V. ALITALIA’S “STOPGA P ” NOTATION REEMPHASIZES THAT UNDER RULE 55(B)(3)(B) OF THE TARIFF, THE TICKET AND GCC APPL Y TO TRAVEL TO AND F ROM THE U.S.

Rule 55(B)(3) (B) clearly states that carriage on Alitalia flights is subject to “Provisions

set forth in the passenger’s ticket. ” Ex. 8. Now, Alitalia has “doubled down” and added a

notation in all capital letters at the beginning of the G CC stating that the provisions of the ticket

apply. Alitalia admits, as is industry custom, that the ticket incorporates the entire GCC.

Therefore, the only reasonable interpretation of Alitalia’s tariff Rule 55 is the one that is

consistent with industr y practice, consistent with what Alitalia has always told its passengers,

consistent with Alitalia’s latest revision to its GCC, consistent with fair treatment of its

passengers and consistent with common sense

– travel to and from the U.S. is subject to t he

provisions in the ticket and the GCC incorporated therein.

Indeed, as Alitalia points out, other airlines have similar language in their tariffs on file

with DOT. Yet Petitioners could find no reported, post

- deregulation cases where either Alitalia

or any other airline disavowed the application of the terms of its unilaterally drafted

transportation contract premised upon the construction of the tariff Alitalia argues here. No

### 10

other airline has taken this position in the EU 261 context. Indeed, Alitalia has never taken this

position before, but has instead used its GCC as a shield. Ex. 5. In short, no other airline has

taken the position that its noticed contractual provisions are a hoax. However, if D OT blesses

Alitalia’s actions here, other airlines will take note and recognize that they too, when it serves

their interests, may be able to disavow their contractual promises to their c ustomers and get away

with it.

VI. ALITALIA MISSES THE POINT REG ARDIN G THE LACK OF APPROVAL OF TARIFF RULE 55

.

Alitalia admits that Rule 55 of its tariff has not been approved by the DOT but misses the

point regarding the consequences of that lack of approval. Petitioners never argued that lack of

approval invalidates th e tariff per se . Instead, Petitioners merely pointed out that, prior to

deregulation when the constructive notice doctrine was applicable, constructive notice was

premised on approval

. Without governmental approval there was no foundation for constructiv e

notice. It was the governmental blessing that elevated the tariff to force of law and provided the

premise for constructive notice. Compl. at pp.11

- 13.

VII. CONCLUSION

.
For the foregoing reasons, the relief requested in Petitioners’ Complaint should b e

granted in full.

## I

(Acts whose publication is obligatory)

REGULATION (EC) No 261/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied

boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91
(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 80(2) thereof,

Having regard to the proposal from the Commission ( 1 ),

Having regard to the opinion of the European Economic and Social Committee ( 2 ),

After consulting the Committee of the Regions,

Acting in accordance with the procedure laid down in Article 251 of the Treaty ( 3 ), in the light of the joint text approved by the Conciliation Committee on 1 December 2003,

Whereas:

(1) Action by the Community in the field of air transport should aim, among other things, at ensuring a high level of protection for passengers. Moreover, full accountshould be taken of the requirements of consumer protection in general.

(2) Denied boarding and cancellation or long delay of flights cause serious trouble and inconvenience to passengers.

(3) While Council Regulation (EEC) No 295/91 of 4 February 1991 establishing common rules for a deniedboarding compensation system in scheduled air transport ( 4 ) created basic protection for passengers, the number of passengers denied boarding against their will remains too high, as does that affected by cancellations without prior warning and that affected by long delays. (4) The Community should therefore raise the standards of protection set by that Regulation both to strengthen the rights of passengers and to ensure that air carriers operate under harmonised conditions in a liberalised market.

(5) Since the distinction between scheduled and non-scheduled air services is weakening, such protection should apply to passengers not only on scheduled but also on non-scheduled flights, including those forming part of package tours.

(6) The protection accorded to passengers departing from an airport located in a Member State should be extended to those leaving an airport located in a third country for one situated in a Member State, when a Community carrier operates the flight.

(7) In order to ensure the effective application of this Regulation, the obligations that it creates should rest with the operating air carrier who performs or intends to perform a flight, whether with owned aircraft, under dry or wet lease, or on any other basis.

(8) This Regulation should not restrict the rights of the operating air carrier to seek compensation from any person, including third parties, in accordance with the law applicable.

(9) The number of passengers denied boarding against their will should be reduced by requiring air carriers to call for volunteers to surrender their reservations, in exchange for benefits, instead of denying passengers boarding, and by fully compensating those finally denied boarding. 17.2.2004 L 46/1 Official Journal of the European Union EN

( 1 ) OJ C 103 E, 30.4.2002, p. 225 and OJ C 71 E, 25.3.2003, p. 188. ( 2 ) OJ C 241, 7.10.2002, p. 29. ( 3 ) Opinion of the European Parliament of 24 October 2002 (OJ C 300 E, 11.12.2003, p. 443), Council Common Position of 18 March 2003 (OJ C 125 E, 27.5.2003, p. 63) and Position of the European Parliament of 3 July 2003. Legislative Resolution of the European Parliament of 18 December 2003 and Council Decision of 26 January 2004. ( 4 ) OJ L 36, 8.2.1991, p. 5.(10) Passengers denied boarding against their will should be able either to cancel their flights, with reimbursement of their tickets, or to continue them under satisfactory conditions, and should be adequately cared for while awaiting a later flight.

(11) Volunteers should also be able to cancel their flights, with reimbursement of their tickets, or continue them under satisfactory conditions, since they face difficulties of travel similar to those experienced by passengers denied boarding against their will.

(12) The trouble and inconvenience to passengers caused by cancellation of flights should also be reduced. This should be achieved by inducing carriers to inform passengers of cancellations before the scheduled time ofdeparture and in addition to offer them reasonable rerouting, so that the passengers can make other arrangements. Air carriers should compensate passengers if they fail to do this, except when the cancellation occurs in extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

(13) Passengers whose flights are cancelled should be able either to obtain reimbursement of their tickets or to obtain re-routing under satisfactory conditions, and should be adequately cared for while awaiting a later flight.

(14) As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided evenif all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.

(15) Extraordinary circumstances should be deemed to exist where the impact of an air traffic management decision in relation to a particular aircraft on a particular day gives rise to a long delay, an overnight delay, or the cancellation of one or more flights by that aircraft, even though all reasonable measures had been taken by theair carrier concerned to avoid the delays or cancellations.

(16) In cases where a package tour is cancelled for reasons other than the flight being cancelled, this Regulation should not apply.

(17) Passengers whose flights are delayed for a specified time should be adequately cared for and should be able to cancel their flights with reimbursement of their tickets or to continue them under satisfactory conditions. (18) Care for passengers awaiting an alternative or a delayed flight may be limited or declined if the provision of the care would itself cause further delay.

(19) Operating air carriers should meet the special needs ofpersons with reduced mobility and any persons accompanying them.

(20) Passengers should be fully informed of their rights in the event of denied boarding and of cancellation or long delay of flights, so that they can effectively exercise their rights.

(21) Member States should lay down rules on sanctions applicable to infringements of the provisions of this Regulation and ensure that these sanctions are applied. The sanctions should be effective, proportionate and dissuasive.

(22) Member States should ensure and supervise general compliance by their air carriers with this Regulation anddesignate an appropriate body to carry out such enforcement tasks. The supervision should not affect the rights of passengers and air carriers to seek legal redress from courts under procedures of national law.

(23) The Commission should analyse the application of thisRegulation and should assess in particular the opportunity of extending its scope to all passengers having a contract with a tour operator or with a Community carrier, when departing from a third country airport to an airport in a Member State.

(24) Arrangements for greater cooperation over the use of Gibraltar airport were agreed in London on 2 December 1987 by the Kingdom of Spain and the United Kingdom in a joint declaration by the Ministers of Foreign Affairs of the two countries. Such arrangements have yet to enter into operation.

(25) Regulation (EEC) No 295/91 should accordingly be repealed,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject

1. This Regulation establishes, under the conditions specified herein, minimum rights for passengers when:

(a) they are denied boarding against their will;

(b) their flight is cancelled;

(c) their flight is delayed. 17.2.2004 L 46/2 Official Journal of the European Union EN2. Application of this Regulation to Gibraltar airport isunderstood to be without prejudice to the respective legal positions of the Kingdom of Spain and the United Kingdom with regard to the dispute over sovereignty over the territory in which the airport is situated.

3. Application of this Regulation to Gibraltar airport shall be suspended until the arrangements in the Joint Declaration made by the Foreign Ministers of the Kingdom of Spain and the United Kingdom on 2 December 1987 enter into operation. The Governments of Spain and the United Kingdom will inform the Council of such date of entry into operation.

Article 2

Definitions

For the purposes of this Regulation:

(a) ‘air carrier’ means an air transport undertaking with a valid operating licence;

(b) ‘operating air carrier’ means an air carrier that performs or intends to perform a flight under a contract with a passenger or on behalf of another person, legal or natural, having a contract with that passenger;

(c) ‘Community carrier’ means an air carrier with a valid operating licence granted by a Member State in accordance with the provisions of Council Regulation (EEC) No 2407/92 of 23 July 1992 on licensing of air carriers ( 1 );

(d) ‘tour operator’ means, with the exception of an air carrier, an organiser within the meaning of Article 2, point 2, of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours ( 2 );

(e) ‘package’ means those services defined in Article 2, point 1, of Directive 90/314/EEC;

(f) ‘ticket’ means a valid document giving entitlement to transport, or something equivalent in paperless form, including electronic form, issued or authorised by the air carrier or its authorised agent;

(g) ‘reservation’ means the fact that the passenger has a ticket, or other proof, which indicates that the reservation has been accepted and registered by the air carrier or tour operator;

(h) ‘final destination’ means the destination on the ticket presented at the check-in counter or, in the case of directlyconnecting flights, the destination of the last flight; alternative connecting flights available shall not be taken into account if the original planned arrival time is respected;

(i) ‘person with reduced mobility’ means any person whose mobility is reduced when using transport because of any physical disability (sensory or locomotory, permanent or temporary), intellectual impairment, age or any other cause of disability, and whose situation needs special attention and adaptation to the person's needs of the services made available to all passengers;

(j) ‘denied boarding’ means a refusal to carry passengers on a flight, although they have presented themselves for boarding under the conditions laid down in Article 3(2), except where there are reasonable grounds to deny them boarding, such as reasons of health, safety or security, or inadequate travel documentation;

(k) ‘volunteer’ means a person who has presented himself for boarding under the conditions laid down in Article 3(2)and responds positively to the air carrier's call for passengers prepared to surrender their reservation in exchange for benefits.

(l) ‘cancellation’ means the non-operation of a flight which was previously planned and on which at least one place was reserved.

Article 3

Scope

1. This Regulation shall apply:

(a) to passengers departing from an airport located in the territory of a Member State to which the Treaty applies;

(b) to passengers departing from an airport located in a third country to an airport situated in the territory of a Member State to which the Treaty applies, unless they received benefits or compensation and were given assistance in that third country, if the operating air carrier of the flight concerned is a Community carrier.

2. Paragraph 1 shall apply on the condition that passengers:

(a) have a confirmed reservation on the flight concerned and, except in the case of cancellation referred to in Article 5, present themselves for check-in, — as stipulated and at the time indicated in advance and in writing (including by electronic means) by the air carrier, the tour operator or an authorised travel agent,

or, if no time is indicated,— not later than 45 minutes before the published departure time; or

(b) have been transferred by an air carrier or tour operator from the flight for which they held a reservation to another flight, irrespective of the reason.

3. This Regulation shall not apply to passengers travelling free of charge or at a reduced fare not available directly or indirectly to the public. However, it shall apply to passengers having tickets issued under a frequent flyer programme or other commercial programme by an air carrier or tour operator. 17.2.2004 L 46/3 Official Journal of the European Union EN

( 1 ) OJ L 240, 24.8.1992, p. 1. ( 2 ) OJ L 158, 23.6.1990, p. 59.4. This Regulation shall only apply to passengers transported by motorised fixed wing aircraft.

5. This Regulation shall apply to any operating air carrier providing transport to passengers covered by paragraphs 1 and 2. Where an operating air carrier which has no contract with the passenger performs obligations under this Regulation, it shall be regarded as doing so on behalf of the person having a contract with that passenger.

6. This Regulation shall not affect the rights of passengers under Directive 90/314/EEC. This Regulation shall not apply in cases where a package tour is cancelled for reasons other than cancellation of the flight.

Article 4

Denied boarding

1. When an operating air carrier reasonably expects to deny boarding on a flight, it shall first call for volunteers to surrender their reservations in exchange for benefits under conditions to be agreed between the passenger concerned andthe operating air carrier. Volunteers shall be assisted in accordance with Article 8, such assistance being additional to the benefits mentioned in this paragraph.

2. If an insufficient number of volunteers comes forward to allow the remaining passengers with reservations to board the flight, the operating air carrier may then deny boarding to passengers against their will.

3. If boarding is denied to passengers against their will, the operating air carrier shall immediately compensate them in accordance with Article 7 and assist them in accordance with Articles 8 and 9.

Article 5

Cancellation

1. In case of cancellation of a flight, the passengers concerned shall:

(a) be offered assistance by the operating air carrier in accordance with Article 8; and

(b) be offered assistance by the operating air carrier in accordance with Article 9(1)(a) and 9(2), as well as, in event of rerouting when the reasonably expected time of departure of the new flight is at least the day after the departure as it was planned for the cancelled flight, the assistance specified in Article 9(1)(b) and 9(1)(c); and

(c) have the right to compensation by the operating air carrier in accordance with Article 7, unless:

(i) they are informed of the cancellation at least two weeks before the scheduled time of departure; or (ii) they are informed of the cancellation between two weeks and seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than two hours before the scheduled time of departure and to reach their final destination less than four hours after the scheduled time of arrival;

or (iii) they are informed of the cancellation less than seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than one hour before the scheduled time of departure and to reach their final destination less than two hours after the scheduled time of arrival.

2. When passengers are informed of the cancellation, anexplanation shall be given concerning possible alternative transport.

3. An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

4. The burden of proof concerning the questions as to whether and when the passenger has been informed of the cancellation of the flight shall rest with the operating air carrier.

Article 6

Delay

1. When an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure:

(a) for two hours or more in the case of flights of 1 500 kilometres or less; or

(b) for three hours or more in the case of all intra-Community flights of more than 1 500 kilometres and of all other flights between 1 500 and 3 500 kilometres; or

(c) for four hours or more in the case of all flights not falling under (a) or (b), passengers shall be offered by the operating air carrier:

(i) the assistance specified in Article 9(1)(a) and 9(2); and

(ii) when the reasonably expected time of departure is at least the day after the time of departure previously announced, the assistance specified in Article 9(1)(b) and 9(1)(c); and

(iii) when the delay is at least five hours, the assistance specified in Article 8(1)(a).

2. In any event, the assistance shall be offered within the time limits set out above with respect to each distance bracket. 17.2.2004 L 46/4 Official Journal of the European Union ENArticle 7

Right to compensation

1. Where reference is made to this Article, passengers shall receive compensation amounting to:
(a) EUR 250 for all flights of 1 500 kilometres or less;
(b) EUR 400 for all intra-Community flights of more than 1 500 kilometres, and for all other flights between 1 500 and 3 500 kilometres;
(c) EUR 600 for all flights not falling under (a) or (b).

In determining the distance, the basis shall be the last destination at which the denial of boarding or cancellation will delay the passenger's arrival after the scheduled time.

2. When passengers are offered re-routing to their final destination on an alternative flight pursuant to Article 8, the arrival time of which does not exceed the scheduled arrival time of the flight originally booked
(a) by two hours, in respect of all flights of 1 500 kilometres or less; or
(b) by three hours, in respect of all intra-Community flights of more than 1 500 kilometres and for all other flights between 1 500 and 3 500 kilometres; or
(c) by four hours, in respect of all flights not falling under (a) or (b),
the operating air carrier may reduce the compensation provided for in paragraph 1 by 50 %.

3. The compensation referred to in paragraph 1 shall be paid in cash, by electronic bank transfer, bank orders or bank cheques or, with the signed agreement of the passenger, in travel vouchers and/or other services.

4. The distances given in paragraphs 1 and 2 shall be measured by the great circle route method.

Article 8

Right to reimbursement or re-routing

1. Where reference is made to this Article, passengers shall be offered the choice between:
(a) — reimbursement within seven days, by the means provided for in Article 7(3), of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger's original travel plan, together with, when relevant, — a return flight to the first point of departure, at the earliest opportunity;
(b) re-routing, under comparable transport conditions, to their final destination at the earliest opportunity; or (c) re-routing, under comparable transport conditions, to theirfinal destination at a later date at the passenger's convenience, subject to availability of seats.

2. Paragraph 1(a) shall also apply to passengers whoseflights form part of a package, except for the right to reimbursement where such right arises under Directive 90/314/EEC.

3. When, in the case where a town, city or region is served by several airports, an operating air carrier offers a passenger a flight to an airport alternative to that for which the bookingwas made, the operating air carrier shall bear the cost of transferring the passenger from that alternative airport either to thatfor which the booking was made, or to another close-by destination agreed with the passenger.

Article 9

Right to care

1. Where reference is made to this Article, passengers shall be offered free of charge:

(a) meals and refreshments in a reasonable relation to the waiting time;

(b) hotel accommodation in cases — where a stay of one or more nights becomes necessary,

or — where a stay additional to that intended by the passenger becomes necessary;

(c) transport between the airport and place of accommodation (hotel or other).

2. In addition, passengers shall be offered free of charge two telephone calls, telex or fax messages, or e-mails.

3. In applying this Article, the operating air carrier shall payparticular attention to the needs of persons with reduced mobility and any persons accompanying them, as well as to the needs of unaccompanied children.

Article 10

Upgrading and downgrading

1. If an operating air carrier places a passenger in a class higher than that for which the ticket was purchased, it may not request any supplementary payment.

2. If an operating air carrier places a passenger in a class lower than that for which the ticket was purchased, it shall within seven days, by the means provided for in Article 7(3), reimburse

(a) 30 % of the price of the ticket for all flights of 1 500 kilometres or less, or 17.2.2004 L 46/5 Official Journal of the European Union EN(b) 50 % of the price of the ticket for all intra-Community flights of more than 1 500 kilometres, except flights between the European territory of the Member States and the French overseas departments, and for all other flights between 1 500 and 3 500 kilometres, or

(c) 75 % of the price of the ticket for all flights not falling under (a) or (b), including flights between the European territory of the Member States and the French overseas departments.

Article 11

Persons with reduced mobility or special needs

1. Operating air carriers shall give priority to carrying persons with reduced mobility and any persons or certified service dogs accompanying them, as well as unaccompanied children.

2. In cases of denied boarding, cancellation and delays of any length, persons with reduced mobility and any persons accompanying them, as well as unaccompanied children, shall have the right to care in accordance with Article 9 as soon as possible.

Article 12

Further compensation

1. This Regulation shall apply without prejudice to a passenger's rights to further compensation. The compensation grantedunder this Regulation may be deducted from such compensation.

2. Without prejudice to relevant principles and rules of national law, including case-law, paragraph 1 shall not apply to passengers who have voluntarily surrendered a reservation under Article 4(1).

Article 13

Right of redress

In cases where an operating air carrier pays compensation ormeets the other obligations incumbent on it under this Regulation, no provision of this Regulation may be interpreted as restricting its right to seek compensation from any person, including third parties, in accordance with the law applicable.In particular, this Regulation shall in no way restrict the operating air carrier's right to seek reimbursement from a tour operator or another person with whom the operating air carrier has a contract. Similarly, no provision of this Regulation may be interpreted as restricting the right of a tour operator or a third party, other than a passenger, with whom an operatingair carrier has a contract, to seek reimbursement or compensation from the operating air carrier in accordance with applicable relevant laws. Article 14

Obligation to inform passengers of their rights

1. The operating air carrier shall ensure that at check-in a clearly legible notice containing the following text is displayed in a manner clearly visible to passengers: ‘If you are denied boarding or if your flight is cancelled or delayed for at least two hours, ask at the check-in counter or boarding gate for thetext stating your rights, particularly with regard to compensation and assistance’.

2. An operating air carrier denying boarding or cancelling a flight shall provide each passenger affected with a written notice setting out the rules for compensation and assistance in line with this Regulation. It shall also provide each passenger affected by a delay of at least two hours with an equivalent notice. The contact details of the national designated body referred to in Article 16 shall also be given to the passenger in written form.

3. In respect of blind and visually impaired persons, the provisions of this Article shall be applied using appropriate alternative means.

Article 15

Exclusion of waiver

1. Obligations vis-à-vis passengers pursuant to this Regulation may not be limited or waived, notably by a derogation or restrictive clause in the contract of carriage.

2. If, nevertheless, such a derogation or restrictive clause is applied in respect of a passenger, or if the passenger is not correctly informed of his rights and for that reason has accepted compensation which is inferior to that provided for in this Regulation, the passenger shall still be entitled to take the necessary proceedings before the competent courts or bodies in order to obtain additional compensation.

Article 16

Infringements

1. Each Member State shall designate a body responsible for the enforcement of this Regulation as regards flights from airports situated on its territory and flights from a third country to such airports. Where appropriate, this body shalltake the measures necessary to ensure that the rights of passengers are respected. The Member States shall inform theCommission of the body that has been designated in accordance with this paragraph. 17.2.2004 L 46/6 Official Journal of the European Union EN2. Without prejudice to Article 12, each passenger may complain to any body designated under paragraph 1, or to any other competent body designated by a Member State, about an alleged infringement of this Regulation at any airport situated on the territory of a Member State or concerning any flight from a third country to an airport situated on that territory.3. The sanctions laid down by Member States for infringements of this Regulation shall be effective, proportionate and dissuasive.

Article 17
Report The Commission shall report to the European Parliament and the Council by 1 January 2007 on the operation and the results of this Regulation, in particular regarding: — the incidence of denied boarding and of cancellation of flights, — the possible extension of the scope of this Regulation to passengers having a contract with a Community carrier or holding a flight reservation which forms part of a ‘package tour’ to which Directive 90/314/EEC applies and who depart from a third-country airport to an airport in a Member State, on flights not operated by Community air carriers, — the possible revision of the amounts of compensation referred to in Article 7(1).
The report shall be accompanied where necessary by legislative proposals.

Article 18
Repeal
Regulation (EEC) No 295/91 shall be repealed.

Article 19
Entry into force
This Regulation shall enter into force on 17 February 2005.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Strasbourg, 11 February 2004.

For the European Parliament
The President

P. COX For the Council
The President

M. McDOWELL 17.2.2004 L 46/7 Official Journal of the European Union ENPage 1

1 of 250 DOCUMENTS

THEODOROS GIANNOPOULOS, and ALEXANDRA GIANNOPOULOS, on b ehalf of themselves and all others similarly situated, Plaintiffs, v. IBERIA LÍNEAS

AÉREAS DE ESPAÑA, S.A., Defendant.

No. 11 C 775

UNITED ST ATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF

ILLINOIS, EASTERN DIVISION

2011 U.S. Dist. LEXIS 82304

July 27, 2011, Decided July 27, 2011, Filed

COUNSEL: [*1] For Theodoros Giannopoulos, Ale xandra Giannopoulos, on behalf of them selves and all others similarly situated, Plaintiffs: Daniel O. Herrera, Jennifer Winter Sprengel, Cafferty Faucher LLP, Chic ago, IL; Joseph Henry "Han Bates , III, Carney Williams Bates Bozeman & Pulliam, PLLC, Williams, LLP, Little Rock, AR.

For Iberia Lineas Aereas de Espana, S.A., Defendant: Anthony U. Battista, Christopher R. Christensen, M ichael J Holland, LEAD ATTORNEYS, Condon & Fo rsyth, LLP, New York, NY; Brent R. Austin, Matthew J Caccamo, Michael Lee McCluggage, Wildman, Harrold, Alle n & Dixon, LLP, Chicago, IL.

For International Airlines Group, S.A., Defendant: Christopher R. Christensen, LEAD ATTORNEY, Co ndon & Forsyth, LLP, New York, NY; Brent R. Austin, Matthew J Caccamo, Michael Lee McCluggage, Wil dman, Harrold, Allen & Dixon, LL P, Chicago, IL.

JUDGES: Hon. JOAN HUMPHREY LEFKOW, United States District Judge.

OPINION BY: JOAN HUMPHREY LEFKOW

OPINION

OPINION AND ORDER
Theodoros and Alexandra Giannopoulos filed this putative class action lawsuit against Iberia Líneas Aéreas de E spaña, S.A. 1 ("Iberia") alleging breach of contract based on Iberia's failure to pay compensation for their delayed flight as required by Iberia's conditions [*2] of contract and Regulation No. 261/2004 of the European Parliament and European Council ("E U 261"). 2 Four other cases founded on similar allegations have been filed in this district by the same plaintiffs' counsel against other airlines. See Polinovsky v. British Airways PLC

, No. 11 C 779; Polinovsky v. Deutsche Lufthansa AG , No. 11 C 780; Volo darskiy v. Delta Air Lines, Inc. , No. 11 C 782; Gurevich v. Compagnia Aereas Italiana, SPA , No. 11 C 1890. Iberia has moved to dismiss plaintiffs' co mplaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the motion [#29] is denied.

1 Plaintiffs have incorrectly identified the d efendant's proper corporate nam e, which should be Iberia, Líneas Aéreas de España, S.A. Operadora, Sociedad Unipersonal. 2 Jurisdiction is founded on the Class Action Fairness Act, 28 U.S.C. § 1332(d).

BACKGROUND 3

3 The facts recounted in this section are taken from the complaint and are presumed true for purposes of resolving the pending motion.
Plaintiffs, Illinois residents, purchased tickets to fly on Iberia to Europe. The tickets incorporated Iberia's conditions of contract. The conditions of contract include a notice to pass engers that "[a]s [*3] established in [EUPage 2 2011 U.S. Dist. LEXIS 82304, *

261], compensation is fixed in the event of a flight ca ncellation unless the latter is due to extraordinary ci rcumstances." Ex. 2 to Compl. at 2. They also provide that "[a]s established in [EU 261], in the event of a long delay in relation to the scheduled departure time of flight, passengers are entitled to immediate aid and a ssistance throughout the duration of the delay." Id. EU 261 applies to passengers with confirmed tickets on flights departing from an airpo rt located in an EU me mber state and flights departing from a non

- EU member state to an airport in an EU member state if the operating carrier has an operating license granted by an EU me mber state. 4 Pursuant to EU 261, passengers on qualifying flights th at are cancelled are entitled to a set amount of compensation so long as the cancellation was not caused by unavoidable extraordinary circumstances. 5 This compensation is separate from any other right a passe nger may have to compensation. Although EU 261 does not explicitly provide compensation for passengers whose flights are delayed, the European Court of Justice ("ECJ") has interpreted EU 261 to require treating pa ssengers whose flights are delayed [*4] by three or more hours as passengers whose flight s are cancelled for pu rposes of its compensation provision. Cases C

- 402/07 & C

- 432/07, Sturgeon v. Condor Flugdienst GmbH , 2009 E.C.R. I

- 10923.

4 Iberia has such a license, granted by Spain. 5 Passengers are also not entitled to compens ation if they a re informed of the cancellation (1) at least two weeks prior to the scheduled departure time, (2) between two weeks and seven days b efore the scheduled departure time and are offered rerouting allowing them to depart no more than two hours before the sched uled departure time and to arrive at their final destination no more than four hours after the scheduled arrival time, or (3) within seven days of the scheduled depa rture time and are offered rerouting allowing them to depart no more than one hour before t he sch eduled departure time and to arrive at their final destination no more than two hours after the scheduled arrival time.
Plaintiffs were scheduled to depart on Iberia Flight 6274 on May 9, 2010 from O'Hare International Airport in Chicago, Illinois to Madrid

- Barajas Airport in Madrid, Spain. From Madrid, they were to continue to their final destination of Athens, Greece. Flight 6274 was [*5] delayed for more than three hours, arriving in Madrid more than three hours after the scheduled arrival time. P laintiffs were informed of the delay only after their flight was scheduled to depart. They were rerouted through Vienna, Austria, where they were required to stay overnight. They ultimately reached Athens appro ximately twenty

- four hours after their origina l scheduled arrival time. Plaintiffs filed a complaint seeking co mpensation through Iberia's website but only received a form email response from Iberia denying their request and indicating that compensation is only available in cases of overbooking.

LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6); Gen. Elec. Capital Corp. v. Lease Resolution Corp. , 128 F.3d 1074, 1080 (7th Cir. 1997). In ruling on a motion to dismiss, the court accepts as true all well

- pleaded facts in the plaintiff's complaint and draws all reasonable inferences in the plaintiff's favor. Dixon v. Page , 291 F.3d 485, 486 (7th Cir. 2002). In order to survive a 12(b)(6) motion, the complaint must not only provide the defendant with fair notice [*6] of the claim's basis, but must also establish that the requested relief is plausible on its face. Ashcroft v. Iqbal , U.S. , 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (20 09); see also Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). The allegations in the complaint must be "enough to raise a right of relief above the speculative level." Twombly , 550 U.S. at 555. At the same time, th e plaintiff need not plead legal theories. Hatmaker v. Mem'l Med. Ctr. , 619 F.3d 741, 743 (7th Cir. 2010). R ather, it is the facts that count.

ANALYSIS

I. Airline Deregulation Act
Iberia first argues that plaintiffs' claim is preempted by the Airline D eregulation Act ("ADA"), 49 U.S.C. § 41713. The ADA was enacted to promote "maximum reliance on competitive market forces." Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992). To ensure that states do not

un do federal deregulation of the airline industry, the ADA includes a preemption provision providing that "a State, political subdivision of a State, or political autho rity of at least 2 States may not enact or enforce a law, regulation, or other provision h aving the [*7] force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. § 41713(b)(1). Thus, for a claim to be preempted, "(1) [a] state must 'enact or enforce' a la w that (2) 'relates to' airline rates, routes, or services, either by expressly referring to them or by having a significant economic effect upon them." Travel All Over the World, Inc. v. Kingdom of Saudi Arabia , 73 F.3d 1423, 1432 (7th Cir. 1996). State c ommon law qualifies as a prov ision having the force and effect of law for purposes of the first prong of the preemption analysis. United Ai r-Page 3 2011 U.S. Dist. LEXIS 82304, *

lines, Inc. v. Mesa Airlines, Inc. , 219 F.3d 605, 607 (7th Cir. 2000). By not addressing it in their response, plai ntiffs apparently concede that the second requirement is
met. 6

6 In response to a similar motion to dismiss filed in Volodarskiy , plaintiffs there, represented by the same counsel as in this case, agree that their breach of contract claim relates to air line rates, routes, or services. See No. 11 C 782, Dkt. No. 32 at 12 n.4.
The Supreme Court carved out an exception to ADA preemption for certain breach of contract claims. In American Airlines, Inc. v. Wolens , 513 U.S. 219, 115 S. Ct. 817, 130 L. Ed. 2d 7 15 (1995), [*8] the Supreme Court held that the ADA does not "shelter airlines from suits alleging no violation of state

- imposed obligations, but seeking recovery solely for the airline's alleged breach of its own, self

- imposed undertakings." Id. at 228. Adjudication of the claim must not require "enlargement or enhancement [of the contract] based on state laws or policies external to the agreement." Id. at 233; see also Onoh v. Nw. Airlines, Inc. , 613 F.3d 596, 600 (5th Cir. 2000). Thus, for example, the portion of a contract claim seeking punitive damages as allowed by state law would be preempted, while that seeking compensatories would not be. Travel All , 73 F.3d at 1432 n.8; In re Jetblue Airways Corp. Privacy Litig. , 379 F. Supp. 2d 299, 317 (E.D.N.Y. 2005). As Wolens explains, "[a] remedy co nfined to a contract's terms simply holds parties to their agreements

-- in this instance, to business judgments an airline made public about its rates and services." Wolens

, 513 U.S. at 229.
Plaintiffs argue that Ib eria voluntarily agreed to a bide by EU 261 by incorporating it into the conditions of contract. Their claim, they posit, is therefore based on a self

- imposed undertaking and fits within the Wolens [*9] exception. Iberia disputes that Wolens applies, a rgui ng that the exception is a narrow one and that adjud icating plaintiffs' claim will require going beyond the contract. This contention is based on the fact that the ECJ has found that, for purposes of compensation under EU 261, a flight delay of over three hours is considered equivalent to a cancellation. Iberia argues that it only agreed in its contract to provide compensation for ca ncelled flights, so plaintiffs' claim for compensation for a long delay enlarges Iberia's contractual undertaking. Ib eria's ar gument is unpersuasive, however, for it agreed to pay compensation as established in EU 261 . The ECJ has determined that EU 261 establishes a right to co mpensation in plaintiffs' case, provided that extraordinary circumstances for the delay cannot be shown . This dec ision is the binding interpretation of EU 261. See Case 69/85, Wünsche Handelsgesellschaft GmbH & Co. v. Germany , 1986 E.C.R. 947, ¶ 13 ("[A] judgment in which the court gives a preliminary ruling on the inte rpretation or validity of an act of a community institution conclusively determines a question or questions of community law . . . ."); Stephen Breyer, Changing [*10] Relationships Among European Constitutional Courts , 21 Cardozo L. Rev. 1045, 1051 (2000) ("[T]he ECJ has final legal authority to interpret an EC law that is binding and 'supreme.'"). Thus, Iberia's agreement to pay compensation according to EU 261 must be read as an agreement to abide by EU 261, as interpreted by the ECJ. The ECJ's decision in Sturgeon , then, cannot be considere d external to the contract.
The cases Iberia cites to support its position that paying compensation for delays is not a self

- imposed undertaking are distinguishable. In Onoh , the Fifth Ci rcuit concluded that the airline had not expressly inco rporated the S chengen Agreements into its contract by mere reference to the need to comply with all applicable law. Onoh , 613 F.3d at 600

- 01. In McMullen v. Delta Air Lines, Inc. , the airline similarly only agreed to comply with any applicable law that is in conflict wi th its inte rnational contract of carriage, leading the district court to find that the airline did not voluntarily undertake to only charge non

- exempt customers a foreign tax. No. 08

- 1523 JSW, 2008 U.S. Dist. LEXIS 75720, 2008 WL 4449587, at *5 (N.D. Cal. Sept. 30, 2008), aff'd , 361 F. App'x 757 (9th Cir. 2010). But see In re Am. Airlines, Inc., Privacy Litig. , 370 F. Supp. 2d 552, 565

- 66 (N.D. Tex. 2005) [*11] (breach of contract claim not preempted where laws plaintiffs relied on were considered to be in corp orated into contract by reference that airline would be "bound to its privacy policy, except as required by law"). In Buck v. American Airlines, Inc. , the First Circuit co ncluded that the Wolens exception did not apply because the federal regulation plaintiffs sought to enforce was not explicitly incorporated into the contract and considering it to be an implicit term incorporated into every contract would undermine the implied right of action do ctrine. 476 F.3d 29, 36

- 37 (1st Cir. 2007). Unlike generic refe rences to "applicable law" or arguments that certain fe deral regulations are implicitly part of every contract, in this case, Iberia specifically refers to complying with EU 261 in its conditio ns of contract. In Delta Air Lines, Inc. v. Black , the Texas Supreme Court held plaintiffs' claim preempted where plaintiffs sought a remedy that was not allowed by federal regulations that were specifically i ncorporated into the airline's contract. 116 S. W.3d 745, 755

- 56 (Tex. 2003). But the federal regulations were considered to be self

- imposed obligations, the problem being instead that plaintiffs [*12] sought to modify the contract and pursue a right external to its terms. Here, by contrast, plaintiffs seek to enforce a right provided by EU 261, despite Iberia's argument that Sturgeon was wrongly decided. If the ECJ had not interpreted EU 261Page 4 2011 U.S. Dist. LEXIS 82304, *

to allow for compensation in cases of delays of more than three hours, the outcome would be different, but, as i t stands, plaintiffs' claim fits within the Wolens exce ption. 7

7 It is possible that the ADA should be read only to preempt claims that involve consideration of domestic, as opposed to foreign, laws and po licies related to airline prices, routes, and s ervices. Having concluded that Iberia expressly incorp orated EU 261 into its contract, transforming a government regulation into a self

- imposed obl igation, the court need not delve further into the language, structure, and purpose of the ADA to determine i f it reaches actions involving foreign law or international agreements.

II. Montreal Convention
Iberia next argues that plaintiffs' claim is preempted by the Montreal Convention. See Convention for the Unification of Certain Rules for International Carri age by Air, May 28, 1999, 2242 U.N.T.S. 350. The Montreal Convention was adopted in [*13] 1999 and came into force in the United States in November 2003. It replaced the Warsaw Convention, which was signed in 1929 and was intended to "achieve uniformity o f rules governing claims arising from international air transportation." El Al Israel Airlines v. Tseng , 525 U.S. 155, 169, 119 S. Ct. 662, 142 L. Ed. 2d 576 (1999) (quoting Eastern Airlines, Inc. v. Floyd , 499 U.S. 530, 552, 111 S. Ct. 1489, 113 L. Ed. 2d 569 (1990)). While the Montreal Convention r etains the Warsaw Convention's focus on "limit[ing] air carriers' potential liability in the event of an accident," Sompo Japan Ins., Inc. v. Nippon Cargo Airlines Co.

, 522 F.3d 776, 779 (7th Cir. 2008), it also "shows i ncreased concern for the rights of passengers." Weiss v. El Al Israel Airlines, Ltd. , 433 F. Supp. 2d 361, 365 (S.D.N.Y. 2006).
The Montreal Convention "applies to all internatio nal carriage of persons, baggage or cargo performed by aircraft for r eward." Montreal Convention art. 1. Article 29, upon which Iberia bases its preemption argument, provides:

In the carriage of passengers, baggage and cargo, any action for damages, ho wever founded, whether under the Conve ntion or in contract or in tor t or otherwise, can [*14] only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective r ights. In any such action, punitive, exemplary or any other non

- compensatory damages shall not be recoverable.

Id. art. 29. As relevant here, article 19 provides that an air carrier is liable for damage caused by delay unless it can prove that it "took all measures that could reasonably be required to avoid the damage or that it was impossible for it . . . to take such measures." Id. art. 19. These prov isions of the Montreal Convention are substantially sim ilar to those of the Warsaw Convention, leading courts to look to cases interpreting the latter in determining the Montreal Convention's preemptive effect. See Narki ewicz

- Laine v. Scandinavian Airlines Sys. , 587 F. Supp. 2d 888, 890 (N.D. Ill. 2008); Paradis v. Ghana Airways Ltd. , 348 F. Supp. 2d 106, 1 11 (S.D.N.Y. 2004).
The Warsaw Convention preempts state law causes of action to the extent that they conflict with it. El Al

, 525 U.S. at 175 ("[T]he Convention's preemptive effect is clear: The treaty precludes [*15] passengers from bringing action unde r local law when they cannot esta blish air carrier liability under the treaty."). Courts are divided as to whether this means that a contract or tort claim falling within the Convention's scope may proceed under state law or must be brought exclusively und er the Convention. Compare Husmann v. Trans World Airlines, Inc. , 169 F.3d 1151, 1152

- 53 (8th Cir. 1999) (Warsaw Convention completely preempts state tort claim), with Nankin v. Cont'l Airlines, Inc. , No. CV 09

- 07851 MMM (RZx), 2010 U.S. Dist. LEXIS 11879, 2010 WL 342632, at *6 (C.D. Cal. Jan. 29, 2010) (the Montreal Convention does not preempt state law causes of action but instead "controls the remedies available and liabilities that can be imposed via those causes of action"). The answer in the Seventh C ircuit is clear: the Warsaw Convention is not the exclusive ground for recovery, and state tort and contract claims, consistent with the Convention, may be brought as well. Sompo , 522 F.3d at 785 ("Article 24 expressly contemplates that an action may be br ought in contract or in tort."). There is no reason why this would change under the Montreal Convention, for article 29 retains the Warsaw Convention's language from article [*16] 24 that claims may be brought "under the Conve ntion or in contract or in to rt or otherwise." See C osgrove

- Goodman v. UAL Corp. , No. 10

- cv

- 1908, 2010 U.S. Dist. LEXIS 54825, 2010 WL 2197674, at *3 (N.D. Ill. June 2, 2010) ("[T]he Montreal Convention does not apply only to actions brought under this Convention, as that would render meaningless the words or in contract or in tort or otherwise." (internal quotation marks omi tted)). Instead of preempting all state law claims, the Montreal Convention's conditions and limits on liability operate as affirmative defenses so as to ensure th at carr iers are only subject to liability as allowed by the Co n-Page 5 2011 U.S. Dist. LEXIS 82304, *

vention. Id.; Narkiewicz

- Laine , 587 F. Supp. 2d at 890. Effectively, then, the Montreal Convention operates as a limitation on recovery not as a bar to a state law action. 8 Raddatz v. Bax Glob al, Inc. , No. 07

- CV

- 1020, 2008 U.S. Dist. LEXIS 51661, 2008 WL 2435582, at *3 (E.D. Wis. June 16, 2008).

8 Considering Sompo and subsequent cases in this district that have followed Sompo , the court does not find persuasive the Central Distr ict of I llinois's conclusion in Schoeffler

- Miller v. Nw. Airlines , No. 08

- CV

- 4012, 2008 U.S. Dist. LEXIS 93851, 2008 WL 4936737, at *3 (C.D. Ill. Nov. 17, 2008), that a negligence claim is co mpletely preempted. [*17] Schoeffler

- Miller did not address Somp o or the Convention's language allowing actions to be brought "in contract or in tort."
In its reply brief, Iberia argues that the Montreal Convention expressly prohibits plaintiffs' claim, as it does not allow for recovery of non

- compensatory da mages. Arg uments first raised in reply, however, are waived. Dexia Credit Local v. Rogan , 629 F.3d 612, 625 (7th Cir. 2010). This is because "a reply brief containing new theories deprives the respondent of an opportunity to brief those new issues." Wright v. United States , 139 F.3d 551, 553 (7th Cir. 1998). Further, the argument raises an affirmative defense, which is only properly a basis for dismissal on a Rule 12(b)(6) motion if the all egations of the complaint demonstrate that plaintiffs have pleaded themselves out of court. United States v. Lewis

, 411 F.3d 838, 842 (7th Cir. 2005). Plaintiffs have alleged that EU 261 provides "standardized compensation

-- separate from individualized compensation which may be provided by other laws upon individualized proof." Co mpl. ¶ 8. Such standardized compensation would a ppear to qualify as "non

- compensatory damages" proh ibited by Article 29 of the Montreal Convention. [*18] Yet, in their prayer for relief, plaintiffs request "actual, compensatory damages in an amount to be determined at trial." Without further briefing on the issue, the court will not find plaintiffs' claim to be precluded by the Montreal Convention. 9

9 The ECJ has determined that article 6 of EU 261, which provides that delayed passengers may be entitle d to certain assistance such as refres hments, meals, and accommodation, is not inco nsistent with the Montreal Convention. Case C

- 344/04, Int'l Air Transp. Ass'n v. Dep't of Transp. , 2006 ECJ EUR

- lex LEXIS 1818 (Jan. 10, 2006). It has not addressed the comp ensation requirement in case of cancellation. The que stions of whether the Montreal Convention would govern cancellation claims, which do not deal with delay but rather nonperformance, and whether delays longer than three hours qualify as nonperformance un der the Convention have not been addressed by the parties.

III. Air Transport Agreement
Iberia further argues that, pursuant to the Air Tran sport Agreement between the United States and the Eur opean Union, EU 261 does not apply to flights departing from the United States. The Air Transport Agreement was entered into by the United States, [*19] the Eur opean Community, and EU member states in 2007. See United States

- European Union Air Transport Agreement, Apr. 27, 30, 1997, 46 I.L.M. 470. Article 7 provide s:

1. The laws and regulations of a Party relating to the admission to or departure from its territory of aircraft engaged in international air navigation, or to the o peration and navigation of such aircraft while within its territory, shall be applie d to the aircraft utilised by the airlines of the other Party, and shall be complied with by such aircraft upon entering or d eparting from or while within the territory of the first Party.
2. While entering, within, or leaving the territory of one Party, t he laws and regulations applicable within that territory relating to the admission to or departure from its territory of passengers, crew or cargo on aircraft (including regulations relating to entry, clearance, immigration, passports, customs and quaranti ne or, in the case of mail, postal regulations) shall be complied with by, or on behalf of, such passengers, crew or cargo of the other Party's airlines.

Id. art. 7. Article 7 is not an exclusivity provision; i nstead, it seeks to ensure only that the la ws of a party r elated to [*20] admission and departure are respected while an airline operates within that party's territory. Its plain language indicates that it reaches laws related to subjects like immigration and customs, not consumer protection. As t o consumer protection, the contracting parties only affirmed in the Air Transport Agreement the "importance of protecting consumers." Id. art. 16. Thus, the Air Transport Agreement does not appear to have any bearing on plaintiffs' claim. But if it did, in suggesting that consumers should be protected and each party's laws should be respected, it actually supports the applicabilityPage 6 2011 U.S. Dist. LEXIS 82304, *

of EU 261 to plaintiffs' flight departing from Chicago and arriving in an EU member state.

IV. Exhaustion of Remedies

Iberia' s next argument is that plaintiffs' claim should be dismissed because they failed to exhaust available remedies in the EU prior to filing suit here. This arg ument does not have merit, either. Plaintiffs need not a nticipate or defuse the issue of exhaustion , an affirmative defense, in their complaint. See Jones v. Bock , 549 U.S. 199, 212, 127 S. Ct. 910, 166 L. Ed. 2d 798 (2007) (prisoner litigation); Laouini v. CLM Freight Lines, Inc.

, 586 F.3d 473, 475 (7th Cir. 2009) [*21] (Title VII). But regardless, the court is not convinced that exhaustion is required.

A. Administrative Exhaustion
Plaintiffs are using a breach of contract action as the vehicle to enforce EU 261 in the United S tates. There is nothing in Iberia's contract that requires plaintiffs to e xhaust any available administrative remedies prior to fi ling suit. Even if this were a proceeding directly under EU 261, the regulation on its face does not explicitly require exhaus tion of administrative remedies. While each member state is required to establish a responsible body for enforcing the regulation, passengers are not required by EU 261 to complain to this body prior to filing suit. Instead, EU 261 provides only that passe ngers "may complain" to this body while leaving open the o ption of resorting to the court system. EU 261 art. 16. Even the EU complaint form Iberia submitted with its briefing does not speak in mandatory terms about the procedure to be followed in seeking to enforce EU 261. See Ex. I to Def.'s Mem. There thus appears to be not hing by way of administrative exhaustion that prevents plaintiffs from pursuing their case in this court without having complained to one of the enforcement [*22] bodies established u nder the regulation.

B. Exhaustion as a Principle of International Law
Alternatively, Iberia contends that international law requires exhaustion of local remedies prior to plaintiffs' turning to a foreign or international forum to pursue their claim. The Seventh Circuit has suggested in dicta that "[i]t may be that a requirement for exhaustion is itself a basic principle of international law." Enahoro v. Abub akar , 408 F.3d 877, 886 (7th Cir. 2005); see also Re statement (Third) of Foreign Relations Law of the United States § 713 cmt. f ("Under international law, ordinarily a state is not required to consider a claim by another state for an injury to its national until that person has e xhausted domestic remedies, unless such remedies are clearly sham or inadequate, or their application is unre asonably prolonged."). This supposed international e xhaustion principle appears to focus on situations invol ving alleged human rights violations and, as applied in the United States, possibly to cases brought under the Alien Tort Claims Act ("ATCA"), 28 U.S.C. § 1350, or the Torture Victim Protection Act ("TVPA"), 28 U.S.C. § 1350, note, § 2(b). 10 See Enahoro , 408 F.3d at 890 n.6 [*23] (Cudahy, J., dissenting) ("Exhaustion o f remedies requirements are a well

- established feature of intern ational human rights law." (citing, inter alia , human rights treaties)). The TVPA contains an explicit exhaustion requirement, 28 U.S.C. § 1350, note, § 2(b) ("A court shall decline to hear a claim under this section if the claimant has not exhausted adequate and available rem edies in the place in which the conduct giving rise to the claim occurred."), while ATCA does not. 11 See Flomo v. Firestone Nat'l Rubber Co., LLC , F.3d , 2011 U.S. App. LEXIS 14179, 2011 WL 2675924, at *11 (7th Cir. July 11, 2011). Plaintiffs' claim does not fall within the areas in which exhaustion is typically required by international law. But the fact that plaintiffs have not sought to recover in a European cour t may be relevant to determining whether the court should decline to exercise jurisdiction over their claim as a matter of international comity. See id. ("[A] U.S. court might, as a matter of international comity, stay an Alien Tort suit that had been file d in the U.S. court, in order to give the courts of the nation in which the violation had occurred a chance to remedy it, provided that the nation seemed willing and [*24] able to do that.").

10 While ATCA provides for jurisdiction only over tort suits brought by aliens, the TVPA pr ovides a cause of action to both aliens and United States citizens. Enahoro , 408 F.3d at 887

- 88 (Cudahy, J., dissenting). 11 The European Commission advocated for exhaustion in an amicus brief to the Supreme Court in an ATC A case. See Sosa v. Alv arez

- Machain , 542 U.S. 692, 733 n.21, 124 S. Ct. 2739, 159 L. Ed. 2d 718 (2004) ("[B]asic pri nciples of international law require that before a sserting a claim in a foreign forum, the claimant must have exhausted any remedies availab le in the domestic legal system, and perhaps in other forums such as international claims tribunals."). But the Supreme Court noted only that it "would certainly consider this requirement in an appr opriate case," without specifying what such a case would b e. Id. Just recently, the Seventh Circuit rejected the argument that exhaustion is required in the nation in which an alleged violation of customary international law occurred, charact erizing the implications of such a requirement as "border[ing] on the ri diculous." Flomo , 2011 U.S. App. LEXIS 14179, 2011 WL 2675924, at *11.Page 7 2011 U.S. Dist. LEXIS 82304, *

V. International Comity
As a last resort, Iberia argues that [*25] this court should, in its discretion, decline to adjudicate plaintiffs' claim on international comity grounds. In i ts standard formulation, comity "is neither a matter of absolute obl igation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, exec utive or judici al acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws." Hilton v. Guyot , 159 U.S. 113, 163

- 64, 16 S. Ct. 139, 40 L. Ed. 9 5 (1895).
Iberia bases its comity argument on two grounds. First, it claims that the EU has established a comprehe nsive enforcement mechanism for EU 261 that would be disturbed by this court's adjudication of a claim invol ving the regulation. As discussed above, the court does not find this argument convincing. While EU 261 does pr ovide that each member state shall designate a body to be charged with enforcing the regulation, it also clearly a llows aggrieved passengers to pursue their rights in court. See E U 261, preamble (22) ("Member States should e nsure and supervise [*26] general compliance by their air carriers with this Regulation and designate an appr opriate body to carry out such enforcement tasks. The supervision should not affect the rights of pas sengers and air carriers to seek legal redress from courts under pr ocedures of national law."). Although Iberia claims that European enforcement was intended to be exclusive, it provides no support for this contention nor has the court been able to find an y. The fact that plaintiffs did not pursue their claim in a European court does tilt the ba lance slightly in favor of declining to adjudicate their claim, but plaintiffs' choice of forum is entitled to some deference as well. 12

12 While unspoken, Iberi a clearly would rather address plaintiffs' claim in a European court, where plaintiffs would not have the option of pursuing a class action. This would effectively lessen Iberia's potential exposure because of the relatively small value of each passenger's claim and the low likelihood of United States citizens bringing suit for an EU 261 violation in a foreign forum. The unavailability of a class action device in Europe may cut in favor of this court declining jurisdiction, as the EU may not have conte mplat ed [*27] having the regulation enforced in a mass action. The lack of a class action mecha nism in Europe should not be construed as depri ving plaintiffs of a forum, as they would still be able to pursue their claim there individually. See Aguinda v. Texac o, Inc. , 142 F. Supp. 2d 534, (S.D.N.Y. 2001) ("The class action mechanism, added to the Federal Rules of Civil Procedure in 1937, is ultimately nothing more than a conv enient procedural device, which most of the world's nations have chosen not to adopt an d the merits of which continue to be debated even in the United States. Its absence does not ordinarily render a foreign forum 'inadequate' for purposes of forum non conveniens analysis." (citations omitted) (internal quotation marks omitted)). It may, how ever, change the plaintiffs' economic calculus. As Iberia does not pursue this argument, and in fact states that it is outside the scope of its motion, see Reply at 12 n.15, the court need not consider it further.
Second, Iberia argues that because courts in EU member states have the ability to refer questions of i nterpretation directly to the ECJ (an option a non

- EU court does not have), dismissal is warranted. See Info. Res., Inc. v. Dun & Bradstreet Corp. , 127 F. Supp. 2d 411, 417 (S.D.N.Y. 2000) [*28] (declining to exercise supplemental jurisdiction over a claim under the Treaty of Rome where, among other things, a European court would have the option of seeking an opinion from the ECJ while the federal court would not). This is partic ularly the case, a ccording to Iberia, because the ECJ's Sturgeon decision is allegedly in doubt. While the ECJ has pending before it a referral that asks the ECJ to re evaluate Sturgeon , this court will be just as able as a E uropean court to apply the ECJ's forthcoming rulin g and could, if necessary, stay a merits decision on compens ation for passengers on flights delayed for over three hours until the ECJ addresses the questions before it. Several courts in EU member states have done this, and it is not an unheard of procedu re in this court. Of course, European courts are more familiar with EU 261 and its application, but the court will not be faced with an area of law so complicated that declining jurisdiction would be prudent. Cf. In re Air Cargo Shipping Servs. Antitrust L itig. , No. MD 06

- 1775(JG)(VVP), 2008 U.S. Dist. LEXIS 107882, 2008 WL 5958061, at *33

- 34 (E.D.N.Y. Sept. 26, 2008) ("While United States courts routinely apply foreign law, the cases cited by plaintiffs grappled [*29] with the comparatively straightforwar d application of foreign laws of property, contract and tort, as opposed to foreign antitrust law."), report and recommendation aff'd in part , 2009 U.S. Dist. LEXIS 97365, 2009 WL 3443405 (E.D.N.Y. Aug. 21, 2009). As the court is not convinced that interna tional comity warrants dismissal, it will allow plaintiffs' contract claim to proceed in this forum.

CONCLUSION AND ORDERPage 8 2011 U.S. Dist. LEXIS 82304, *

For the foregoing reasons, Iberia's motion to dismiss [#29] is denied. Iberia has until August 10, 2011 to a nswer the complaint.

Dat ed: July 27, 2011 Enter: /s/ Joan Humphrey Lefkow

JOAN HUMPHREY LEFKOW
United States District JudgePage 1

1 of 1 DOCUMENT

PAVEL POLINOVSKY and ILONA POLINOVSKY, and HAS

- PETER BAUMEISTER, on behalf of themselves and all others similarly situated, Plaintiffs,

v. DEUTSCHE LUFTHANSA, AG, Defendants.

Case No. 11 CV 780

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF

ILLINOIS, EASTERN DIVISION

2012 U.S. Dist. LEXIS 44363

March 30, 2012, Decided March 30, 2012, Filed

COUNSEL: [*1] For Pavel Polinovsky, On behalf of themselves and all others simi larly situated, Ilona Polinovsky, On behalf of themselves and all others sim ilarly situated, Plaintiffs: Daniel O. Herrera, Jennifer Winter Sprengel, Cafferty Faucher LLP, Chicago, IL; Joseph Henry "Han Bates, III, Carney Williams Bates Pulliam & Bowman, P LLC, Little Rock, AR.

For Hans

- Peter Baumeister, On behalf of themselves and all others similarly situated, Plaintiff: Joseph Henry "Han Bates, III, Carney Williams Bates Pulliam & Bowman, PLLC, Little Rock, AR.

For Deutsche Lufthansa AG, Defendant: Anthony U. Battista, Christopher R. Christensen, Michael J Holland, LEAD ATTORNEYS, Condon & Forsyth, LLP, New York, NY; Brent R. Austin, Matthew J Caccamo, E dwards Wildman Palmer LLP, Chicago, IL; Michael Lee McClugga ge, Wildman, Harrold, Allen & Dixon, LLP, Chicago, IL.

JUDGES: Honorable Sharon Johnson Coleman. Magi strate Judge Maria Valdez.

OPINION BY: Sharon Johnson Coleman

OPINION

MEMORANDUM OPINION AND ORDER
Plaintiffs, Pavel Polinovsky , Ilona Polinovsky and Hans

- Peter Baumeister, individually and on behalf of all others similarly situated (the "Class"), bring this putative class action for breach of contract against Defendant Deutsche Lufthansa AG [*2] ("Lutfhansa") based upon its failure to comply with Reg ulation No. 261/2004 of the European Parliament and European Council ("EU 261"). Defendant has moved to dismiss plaintiffs' co mplaint under the Federal Rules of Civil Procedure 12(b)(6). For the following reasons, the motion is denied.

B ACKGROUND

Plainti ffs Pavel and Ilona Polinovsky ("the Polinovskys") are residents of Illinois and were co nfirmed passengers on Lufthansa Flight 467 scheduled to depart from Miami, Florida to Dusseldorf, Germany on December 18, 2010 at 6:25 PM. From Dusseldorf, the Polinovs kys had a connecting flight scheduled to arrive at Warsaw on Sunday, December 19, 2010 at 12:05. As with all United States passengers traveling to Europe, plaintiffs' ticket with Lufthansa incorporated a contract, (the "Conditions of Carriage"), that provi ded certain remedies pursuant to EU 261. The Conditions of Co ntract state that "[i]n the case of a flight cancellation or flight delay, we offer assistance and compensation to the concerned passengers according to the [EU 261]." Def.'s Ex. C art. 9.2.2. Pu rsuant to EU 261 passengers on ce rtain flights that have been cancelled are entitled to a specified amount of compensation as [*3] long as the cancellation was not caused by unavoidable extraord inary circumstances. EU 261, however, does not explici tly pro vide compensation for passengers whose flights are delayed. Instead, the European Court of Justice ("ECJ"), has interpreted EU 261 to make no distinction between passengers whose flights have been delayed by three orPage 2 2012 U.S. Dist. LEXIS 44363, *

more hours and passengers whose flights have been ca ncelled. Sturgeon v. Condor Fludienst GmbH , 2009 E.C.R. I

- 10923.
On the day of departure, the Polinovskys' flight was delayed and as a result they missed their connecting flight in Dusseldorf. The Polinovskys ultimately suffered a loss of time in excess of three hours. The Polinovskys were not offered re

- routing nor compensation for this delay.
Additionally, plaintiff Hans

- Peter Baumeister ("Baumeister") is a resident of California and was a co nfirmed passenger on Lufthansa Flight 1371 schedule d to depart from Stuttgart, Germany on October 4, 2010 at 1:20 PM and arrive in Munich, Germany. Baumeister had a connecting flight scheduled to depart from Munich at 4:15 PM and arrive in San Francisco, California. Baumeister's ticket also included a cont ract with Lufthansa that provided remedies under EU 261. [*4] Baumeister's flight was cancelled and he was not offered an opportunity to re

- route his travel plans nor compens ation for his delay.
Because plaintiffs have not received compensation for their cancelled or delayed flights, plaintiffs claim that Lufthansa has violated its own Conditions of Carriage. Consequently, plaintiffs have filed this punitive class action for breach of contract.

L EGAL S TANDARD A motion under Rule 12(b)(6) challenges the s ufficiency of the complaint to state a claim upon which relief may be granted. Christensen v. County of Boone, 483 F.3d 454, 458 (7th Cir. 2007). Pursuant to the federal notice pleading standard, a complaint need only provide "a short and plain statement o f the claim" showing that the plaintiff is entitled to relief and sufficient to provide the defendant with fair notice of the claim and its basis. Tamayo v. Blagojevich , 526 F.3d 1074, 1081 (7th Cir. 2008). In order to withstand a motion to dismiss under 1 2(b)(6), a plaintiff's complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Cor

p. v. Twombly , 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). [*5] For a claim to have facial plausibility, a plaintiff must plead "factual content that allows the court to draw the reaso nable inference that the defendant is liable for the mi sconduct alleged." Id . Thus, the complaint need not set forth "detailed factual allegations," but it must plead facts that "raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). D ISCUSSION

1. Airline Deregulation Act
Defendant first argues that plaintiffs' claim should be dismissed because it is preempted by the Airline D eregulation Act ("ADA"). In order to ensure th at states would not ignore federal airline regulation in favor of regulation of their own, the ADA provides that "a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other pr ovision having the force and effect of law r elated to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. § 41713 (b)(1); Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L. Ed. 2d 157 (1992). Essentially, the ADA displaces [*6] all state law, including those that "fall within its sphere" that relate to an air carrier's price, routes and services. Morales , 504 U.S. 387. Therefore, state law causes of action are preempt ed by the ADA when two elements are pr esent: (1) the claim relates to airline prices, routes or se rvices; and (2) the claim involves the enactment or e nforcement of a state law, regulation or provision, inclu ding state common law. Travel All Over the World , Inc. v. Kingdom of Saudi Arabia , 73 F.3d 1423, 1432 (7th Cir. 1996); United Airlines, Inc. v. Mesa Airlines, Inc . 219 F.3d 605, 607 (7th Cir. 2000). Here, defendant argues that the plaintiffs' claim meets both of these elements and therefore should be pr eempted.
In response, plaintiffs argue that the exception to ADA preemption established in American Airlines v. Wolens exempts their claim from dismissal. In Wolens

, the Supreme Court articulated an exception to ADA preemption for routine breach o f contract claims "see king recovery for an airline's breach of its own self i mposed undertakings." American Airlines v. Wolens , 513 U.S. 219, 115 S. Ct. 817, 130 L. Ed. 2d 715 (1995). To avoid ADA preemption under Wolens , a breach of co ntract claim [*7] m ust be based on the parties' own co ntract, with no enlargement or enhancement through state laws or policies external to the agreement. Id ., at 233. Plaintiffs' argue that because EU 261 is incorporated into Lufthansa's Conditions of Carriage Agreement, pr ovi ding compensation for flights delayed more than 3 hours constitutes Lufthansa's own self imposed undertaking.
Lufthansa, however, disagrees. Lufthansa argues that compensation for delayed flights is governed by Section 14.4.1 in its Conditions of Carria ge which states that Lufthansa will provide delayed passengers assi stance and a ticket refund. Therefore, applying the EU 261 and the aforementioned Sturgeon decision would enlarge or enhance the contract that it has made with plaintiffs, which is expressl y prohibited by the ADA.Page 3 2012 U.S. Dist. LEXIS 44363, *

Section 9.2.2 of the Lufthansa's Conditions of Ca rriage Agreement specifically states that, "[I]n the case of a flight cancellation or flight delay we offer assistance and compensation to the concerned passengers according to [EU26 1]." Therefore, Lufthansa's reliance on Section 14.4.1 of its Conditions of Carriage is insufficient. Fu rther, the ECJ, through the Sturgeon decision, has esta blished that EU 261 [*8] offers a right to compensation to passengers that have experienced a de lay of three hours or more that is not the result of extraordinary ci rcumstances. Therefore, the ECJ's decision interpreting EU 261 cannot be construed as an external expansion of the Lufthansa's contract with plaintiffs, but instead serves as guidance on how to apply regulation EU 261.
Further, the primary cases cited in Lufthansa's briefs are distinguishable. In Onoh , the court concluded that a mere reference to the need for the airline to comply with "all applicable laws" did not specifically incorporate the Schengen Agreement into its contract. Onoh v. Nort hwest Airlines, Inc ., 613 F.3d 596, 601 (5th Cir. 2010). Similarly, in McMullen v. Delta Airline, Inc ., the court did not find that an airline agreed to only charge certain customers a foreign tax when it agreed to comply with any applicable law that conflicts with its international contract of carriage. No. 08

- 1523, 2008 U.S. Dist. LE XIS 75720, 2008 WL 4449587, at *1 (N.D. Cal. Sept. 30, 2008). In those cases, the courts rejected the argument that a ge neric boilerplate reference to compliance with all "applicable law" incorporated certain specific regul ations into the contracts at issue. [*9] In contrast, Lufthansa's contract specifically referenced EU 261 and included language stating its intent to pr ovide compens ation according to EU 261 regulations. Because plaintiffs are seeking to enforce their right to compensation as provided under EU 261, the compensation plaintiffs are seeking constitutes Lufthansa's own undertaking. Ther efore, plaintiff's brea ch of contract claim falls within the Wolens exception and is not preempted by the ADA.

2. Montreal Convention
Next, Lufthansa argues that plaintiffs' claim should be preempted by Article 19 of the Montreal Convention. The Montreal Convention, which repl aced the Warsaw Convention in 2003, is a self

- executing treaty of the United States that consolidates and unifies "certain rules for international carriage by air." Montreal Convention, Preamble. Specifically, it provides passengers the right to damages ar ising from "any carriage in which, according to the Agreement between the parties, the place of d eparture and the place of destination . . . are situated . . . within the territory of two State Parties." Id . art. 1(2). Lufthansa argues that because the pla intiffs' claim stems from travel between signatory countries, namely [*10] the United States, Germany and Poland, the Montreal Convention should govern their claims. Under Article 19 of the Montreal Convention, a passenger has a right to limited compensat ion in the event of a flight delay. Lufthansa argues that Article 19 applies to plaintiffs' claim therefore their claim should be dismissed from this Court.
It is undisputed that the Montreal Convention preempts state law causes of action that are in confl ict with the provisions of the Convention. El Al Israel Ai rlines, Ltd v. Tseng , 525 U.S. 155, 175, 119 S. Ct. 662, 142 L. Ed. 2d 576. 525 U.S. 155, 119 S.Ct. 662, 142 L. Ed. 2d 576 (1999). Courts are divided, however, as to whether this means that a contra ct or tort claim falling within the scope of the Convention may proceed under state law or must be brought under the Convention. See Husmann v. TransWorld Airlines, Inc. , 169 F.3d 1151, 1152

- 53 (8th Cir. 1999); but see Nankin v. Cont'l Ai rlines, Inc ., No. CV 09

- 07851 MMM (RZx), 2010 U.S. Dist. LEXIS 11879, 2010 WL 342632, at *6 (C.D. Cal. Jan. 29, 2010). 1 Despite this division, the Seventh Ci rcuit has previously decided that the Warsaw Convention is not the exclusive ground for recovery these claims. Sompo , 522 F.3d at 785. Therefore, state contract and tort claims, consistent with [*11] the Warsaw Conve ntion, are not preempted. Id . In reaching this decision, the Seventh Circuit relied upon the language of Article 24 of the Warsaw Convention which suggests that an action may be brought "in contract or tort or otherwise." Id . at 776. Article 29 of the Montreal Convention utilizes la nguage similar to Article 24 of the Warsaw Convention and states that:

In the carriage of passengers, baggage and cargo, an y action for damages, ho wever founded, whether under the Conve ntion or in contract or in tort or otherwise

, can only be brought subject to the cond itions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such a ction punitive, exemplary or any other

non

- compensatory damages shall not be recoverable. Id . Art. 29 (emphasis added).

Therefore, the Seventh Circu it's holding in Sompo applies to the Montreal Convention as well. Co sgrove

- Goodman v. UAL Corp. , No. 10

- cv

- 1908, 2010 U.S. Dist. LEXIS 54825, 2010 WL 2197674, at *3 (N.D. Ill. June 2, 2010). Accordingly, plaintiffs' claims are not preempted by the Montreal Convention. 2Page 4 2012 U.S. Dist. LEXIS 44363, *

1 Because they both incorporate [*12] the same language, courts often rely upon cases i nterpreting the Warsaw Convention to determine the preemptive effect of the Montreal Conve ntion. 2 In its reply brief, Lufthansa further argues that the Montreal Convention prohibits plaintiffs' claim because the Montreal Convention does not allow for the recovery non

- compensatory da mages. Arguments, however, first raised in the r eply brief are waived. Dexia Credit Local v. Rogan , 629 F.3d 612, 625 (7 th Cir. 2010). Therefore, this Court will not decide whether plaintiffs' claims are precluded under the Montr eal Convention at this time without plaintiffs' ha ving an opportunity to respond to Lufthansa's newly raised argument regarded damages.

3. Air Tra nsport Agreement
Lufthansa's next argument applies only to the Polinovskys' claims. Lufthansa contends that the Polinovskys' claim fails because, pursuant to the Air Transport Agreement ("ATA"), EU 261 does not apply to flights departing the United States . The ATA is an agreement entered into between the United States and the European Community that states:

While entering within or leaving the territory of one Party, the laws and reg ulations applicable within that territory r elating to the admission [*13] to or d eparture from its territory of passengers, crew or cargo on aircraft . . . shall be complied with by, or on behalf of, such passengers, crew or cargo of the other Party's airlines. Air Transport Agreement, Article 7(2).

Lufthansa believes i t should not be compelled to abide by EU 261 regulations without the express approval of the United States because the ATA makes no mention of EU 261.
In its motion to dismiss, Lufthansa cites the la nguage of the ATA, the relevant part being, "the laws and regulations within that territory relating to admission to or departure from its territory . . . shall be complied with." This language indicates that the laws of a party regarding an aircraft's admission or departure are r espected while the aircraft carrier operates within that party's territory. Neither this language, nor the language in the entirety of the ATA, makes any mention of the laws that shou ld be used to govern compensation for delayed flights. Instead, the only language included in the ATA potentially relevant to the Polinovskys' claim is the "importance of protecting consumers." Id . art. 16. The ATA offers no additional guidance related to co nsumer protection. Therefore, this [*14] Court finds that the ATA has no bearing on whether EU 261 applies to the Polinovskys' breach of contract claim.

4. Baumeister's Breach of Contract Claim
Lufthansa's next argument is that plaintiff Baumeister's breach of contract claim fails because EU 261 only requires operating carriers to pay compensation to passengers whose flights have been delayed. Plaintiff Baumeister was a passenger on Lufthansa Flight 1371. Lufthansa alleges that Flight 1371 was subject to a code share agreement between Augsburg Airways and Lufthansa, designating Lufthansa as the contracting ca rrier and Augsburg Airways as the operating carrier. Pu rsuant to the code share agreement, "[i]f in the case of a Code Share flight LH is indicated as the carrier, these Conditions of Carriage also apply to such transport ation." EU 261 is incorporated into the Conditions of Ca rriage and allows for compensation to passengers whose flights have been delayed more than three hours. Ho wever, EU 261 limits liability to operating carriers only. EC 261, Article 3(5). As the contracting carrier, Lufthansa argues that it is not liable to provide any co mpensation to Baumeister for his delay.
Plaintiffs, on the other hand, argue that [*15] based upon the plain l anguage of Lufthansa's Conditions of Carriage, Lufthansa should still be liable to Baumeister because Lufthansa was responsible "for the entirety of the Code Share journey for all obligations to passengers established in these rules." Defs.' Ex. C, Section 2.3. Plaintiffs also request an opportunity for more discovery on the relationship between Lufthansa and Augsburg Airways prior to a dismissal of this claim to determine whether the two airlines operate as different entities with separate Conditions of Ca rriage.
The distinction between the operating carrier and contracting carrier of Flight 1371 is an issue outside of the complaint in this case. Despite Lufthansa's assertion that Augsburg Airways was the operating carrier of Baumeister's flight, Baumeister 's ticket included no la nguage that indicated that Augsberg Airways was the o perating carrier of the Flight 1371 or that Baumeister had formed a contract with Augsburg Airways. Further, while Augsburg Airways is a wholly owned subsidiary of Lufthansa, the business relationship between the two airlines remains unknown. Therefore, there exists sufficient uncertainty to create a factual dispute as to whether Lufthansa [*16] or Augsburg Airways acted as the o perating carrier of Flight 1371 and whether this inf o rmation was available to the Baumeister at the time of his flight. While it ultimately may be determined that Aug s-Page 5 2012 U.S. Dist. LEXIS 44363, *

burg Airways was the operating carrier of Flight 1371, at this stage, plaintiffs have not yet been given the oppo rtunity to engage in discove ry on this issue. Therefore, applying the facts in the light most favorable to the plaintiffs, dismissing Baumeister's claim would be i mproper at this time.

5. Exhaustion of Remedies
Lufthansa's next argument is that all plaintiffs' claim should be dismi ssed because they have failed to exhaust all other available remedies in the European Union courts. In response, plaintiffs argue there is nothing in EU 261 or Lufthansa's Conditions of Carriage that r equires them to exhaust any available administrative

re medies prior to filing this suit. In their reply brief, Lufthansa admits plaintiffs' argument to be true, but, nevertheless requests this court to exercise its discretion to dismiss plaintiffs' claims for failure to exhaust pr escribed administrative remedi es. Def.'s Reply Br. at 11, citing Gonzalez v. O'Connell , 355 F.3d 1010, 1016 (7th Cir. 2004).
Again, [*17] there is nothing in EU 261 that r equires exhaustion of administrative remedies. The EU does require each member state to establish a responsible bo dy to enforce its regulations. Airline passengers, ho wever, are not required to complain to this body prior to filing a lawsuit. EU 261 Preamble (22).
Further, Lufthansa suggests that, although it may not be required in this case, exhaustion is a basic pri ncipal of international law. However, the Seventh Circuit case cited to support Lufthansa's contention, Enahoro v. Abubakar , focuses on situations involving human rights, not on routine breach of contract matters. 408 F.3d 877, 886 (7th Cir. 2005). Because plaintiffs' claim falls ou tside the areas in which international law typically r equires exhaustion of remedies, the court is not convinced that this type of discretionary dismissal for failure to exhaust available remedies is appropriate here.

6. Interna tional Comity
Lastly, Lufthansa argues that plaintiffs' complaint should be dismissed because a United States court's a djudication of plaintiffs' breach of contract claims, in which EU 261 could apply, contravenes principles of international comity. International comity is "the reco gnition [*18] which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other pers ons who are under the protection of its laws." Hilton v. Guyot , 159 U.S. 113, 163

- 64, 16 S. Ct 139, 40 L.Ed. 95 (1895). Lufthansa argues that deference to European courts is appropriate in this case because the EU has already established a regulatory and j udicial framework to e nforce and adjudicate claims under EU 261. Further, Lufthansa argues that European courts have access to the ECJ, the highest court of the European Union, to answer questions of European law that may arise in this matter. As the ECJ i s not available to non

- European Union courts, adjudicating plaintiffs' claim before this Court would deny parties access to the ECJ. The lack of access to ECJ guidance would be "particularly inappropriate" here because the ECJ has accepted an appeal seekin g clarification about a central point in this matter: whether EU 261 permits passengers to recover compensation for flight delays. Therefore, Lufthansa argues that allowing this case to proceed may force this [*19] Court to d ecide European law without the opportunity to seek p otentially necessary guidance from the ECJ.
First, while this Court does recognize that EU courts have mechanisms in place to adjudicate claims similar to the plaintiffs, a plaintiff may, but is not required to ut ilize these mechanism s. Instead plaintiffs have the right to "seek legal redress from courts under the procedures of national law." EU 261 Preamble (22). Therefore, plai ntiffs have a right to proceed in this Court, despite the existence of an alternative enforcement mechanism u nder the EU. There is nothing in EU 261 that suggests otherwise.
Second, although this Court recognizes the unavai lability of the ECJ to resolve questions regarding Eur opean Union law, the Seventh Circuit has previously failed to decline jurisdiction base d on principles of co mity where there is no competing or parallel action and the claim is premised on breach of contract law. S ee, e.g. AAR Int'l, Inc. v. Nimelias Enters. S.A. , 250 F.3d 510 (7th Cir. 1996). Here, plaintiff is seeking enforcement of a brea ch of contract claim. The matter does not involve an area of law so complicated that this court will be un able to apply EU 261. Furthermore, [*20] the court re cognizes that the ECJ has a referral seeking to reevaluate Sturgeon . This Court will be able to apply the ECJ's forthcoming ruling while postponing action or to stay the merits of this case pending a decision by the ECJ on the question at issue. Therefore, the court does not feel that this matter requires dismissal for the sake of international comit y.

C ONCLUSION For the foregoing reasons, Defendant Lufthansa's motion to dismiss [29] is denied.

IT IS SO ORDERED.

/s/ Sharon Johnson ColemanPage 6 2012 U.S. Dist. LEXIS 44363, *

Honorable Sharon Johnson Coleman Dated: March 30, 2012